PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of January 30, 1997 is
executed by NOR'WESTER BREWING COMPANY, an Oregon Corporation ("BORROWER") in
favor of UNITED BREWERIES OF AMERICA, INC., a Delaware corporation
("PURCHASER").
RECITALS
A. Pursuant to a Credit Agreement, dated as of January 30, 1997 (the
"CREDIT AGREEMENT"), by and between Borrower and Purchaser, Purchaser has agreed
to extend certain credit facilities to Borrower upon the terms and subject to
the conditions set forth therein.
B. Purchaser's obligation to enter into the Credit Agreement and provide
Advances to Borrower under the Credit Agreement is subject, among other
conditions, to receipt by Purchaser of this Agreement, duly executed by
Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower hereby agrees with Purchaser as follows:
1. DEFINITIONS AND INTERPRETATION. Unless otherwise defined herein, when
used in this Agreement, the following terms shall have the following respective
meanings:
"BORROWER" shall have the meaning given to that term in THE INTRODUCTORY
PARAGRAPH.
"CREDIT AGREEMENT" shall have the meaning given to that term in THE
INTRODUCTORY PARAGRAPH.
"NORTH COUNTRY" shall mean North Country Joint Venture, LLC, a limited
liability corporation organized under the laws of Oregon.
"OPERATING AGREEMENT" shall mean that certain North Country Joint Venture,
L.L.C. Operating Agreement dated as of March 5, 1996.
"PERMITTED LIENS" shall have the meaning given to that term in SUBPARAGRAPH
3.01(a).
"PLEDGED COLLATERAL" shall have the meaning given to that term in PARAGRAPH
2 hereof.
"PURCHASER" shall have the meaning given to that term in THE INTRODUCTORY
PARAGRAPH.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Credit Agreement shall have the respective meanings given to
those terms in the Credit Agreement, and all terms defined in the UCC shall have
the respective meanings given to those terms in the UCC. The rules of
construction set forth in SECTION I OF THE CREDIT AGREEMENT shall, to the extent
not inconsistent with the terms of this Agreement, apply to this Agreement and
are hereby incorporated by reference.
2. PLEDGE. As security for the Obligations, Borrower hereby pledges and
assigns to Purchaser and grants to Purchaser a security interest in all right,
title and interest of Borrower in and to the property described in ATTACHMENT 1
hereto, whether now owned or hereafter acquired (collectively and severally, the
"PLEDGED COLLATERAL"), which pledge and grant shall be deemed to have been made
in accordance with Article X of the Operating Agreement by which Purchaser shall
at all times be bound.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Purchaser as follows:
(a) Borrower is the legal and beneficial owner of the Pledged
Collateral (or, in the case of after-acquired Pledged Collateral, at the
time Borrower acquires rights in the Pledged Collateral, will be the legal
and beneficial owner thereof). No other Person has (or, in the case of
after-acquired Pledged Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of Lien or
otherwise) in, against or to the Pledged Collateral, other than with
respect to the Liens set forth in ATTACHMENT 2 ("PERMITTED LIENS").
(b) Purchaser has (or in the case of after-acquired Pledged
Collateral, at the time Borrower acquires rights therein, will have) a
second priority perfected security interest in the Pledged Collateral
subject only to the Permitted Lien in favor of Bank of America NT&SA.
(c) Borrower keeps all records concerning the Pledged Collateral and
all instruments and other writings evidencing the same at its chief
executive office located at 66 S.E. Morrison Street, Portland, Oregon
97214.
4. COVENANTS. Borrower hereby agrees as follows:
(a) Borrower, at Borrower's expense, shall promptly procure, execute
and deliver to Purchaser all documents, instruments and agreements and
perform all acts which are reasonably necessary or desirable, and which
Purchaser may reasonably request, to establish, maintain, preserve, protect
and perfect the Pledged Collateral, the Lien granted to Purchaser therein
and the priority of such Lien or to enable Purchaser to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Without limiting the generality of the preceding sentence,
Borrower shall (i) procure, execute and deliver to Purchaser all
endorsements, assignments, financing statements and other instruments of
transfer reasonably requested by Purchaser and (ii) deliver to Purchaser
promptly upon receipt originals of all other Pledged Collateral and all
instruments, and other writings evidencing the same.
(b) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Pledged Collateral.
(c) Without thirty (30) days' prior written notice to Purchaser,
Borrower shall not change its place of business (or, if Borrower has more
than one place of business, its chief executive office), or the office in
which Borrower's records relating to the Pledged Collateral are kept.
(d) Borrower shall appear in and defend any action or proceeding
which may affect its title to or Purchaser's interest in the Pledged
Collateral.
(e) Borrower shall keep separate, accurate and complete records of
the Pledged Collateral and shall provide Purchaser with such records and
such other reports and information relating to the Pledged Collateral as
Purchaser may reasonably request from time to time.
(f) Borrower shall not surrender or lose possession of (other than to
Purchaser), sell, encumber, lease, rent, option, or otherwise dispose of or
transfer any Pledged Collateral or right or interest therein and Borrower
shall keep the Pledged Collateral free of all Liens except the Liens
created pursuant to this Agreement and Permitted Liens.
5. VOTING RIGHTS AND DIVIDENDS PRIOR TO DEFAULT. Unless an Event of
Default has occurred and is continuing (and, if applicable, the expiration of
the sixty (60) day period as provided in the Credit Agreement), Borrower may
exercise or refrain from exercising any and all voting and other consensual
rights pertaining to the Pledged Collateral or any part thereof; PROVIDED,
HOWEVER, that Borrower shall not exercise or refrain from exercising any such
rights where the consequence of such action or inaction would be (a) to impair
any Pledged Collateral, the Lien granted to Purchaser therein, the priority of
such Lien or Purchaser's rights and remedies hereunder with respect to any
Pledged Collateral, (b) to breach or violate any representation, warranty or
covenant made by Borrower under this Agreement, the other Credit Documents to
which Borrower is a party, the Investment Agreement or any Ancillary Agreement
to which Borrower is a party, or (c) otherwise inconsistent with the terms of
this Agreement, the other Credit Documents, the Investment Agreement or any
Ancillary Agreement.
6. AUTHORIZED ACTION BY PURCHASER. Borrower hereby irrevocably appoints
Purchaser as its attorney-in-fact and agrees that after the occurrence and
during the continuance of an Event of Default (and, if applicable, the
expiration of the sixty (60) day
period as provided in the Credit Agreement) Purchaser may perform (but Purchaser
shall not be obligated to and shall incur no liability to Borrower or any third
party for failure so to do) any act which Borrower is obligated by this
Agreement to perform, and to exercise such rights and powers as Borrower might
exercise with respect to the Pledged Collateral, including, without limitation,
the right to (a) collect by legal proceedings or otherwise and endorse, receive
and receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Pledged Collateral;
(b) enter into any extension, reorganization, deposit, merger, consolidation or
other agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Pledged Collateral; (c) insure, process,
preserve and enforce the Pledged Collateral; (d) make any compromise or
settlement, and take any action it deems advisable, with respect to the Pledged
Collateral; (e) pay any indebtedness of Borrower relating to the Pledged
Collateral; and (f) execute UCC financing statements and other documents,
instruments and agreements required hereunder. Borrower agrees to reimburse
Purchaser upon demand for all reasonable costs and expenses, including
attorneys' fees, Purchaser may incur while acting as Borrower's attorney-in-fact
hereunder, all of which costs and expenses are included in the Obligations.
7. EVENTS OF DEFAULT.
(a) EVENT OF DEFAULT. Borrower shall be deemed in default under this
Agreement upon the occurrence and during the continuance of an Event of
Default, as that term is defined in the Credit Agreement.
(b) VOTING RIGHTS AND DIVIDENDS. Upon the occurrence and during the
continuance of an Event of Default (and, if applicable, the expiration of
the sixty (60) day period as provided in the Credit Agreement):
(i) All rights of Borrower to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to PARAGRAPH 5 hereof shall cease and all such rights shall
thereupon become vested in Purchaser which shall thereupon have the
sole right, but not the obligation, to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such
dividends and interest payments.
(ii) Borrower shall promptly deliver to Purchaser to hold as
Pledged Collateral all dividends and interest received by Borrower
after the occurrence and during the continuance of any Event of
Default, in the same form as so received (with any necessary
endorsement), and, until so delivered, shall hold such dividends and
interest in trust for the benefit of Purchaser, segregated from the
other property or funds of Borrower.
(c) OTHER RIGHTS AND REMEDIES. In addition to all other rights and
remedies granted to Purchaser by this Agreement, the other Credit
Documents, the UCC and other applicable laws, rules or regulations of any
governmental authority, Purchaser may, upon the occurrence and during the
continuance of any Event of Default (and, if applicable, the expiration of
the sixty (60) day period as provided in the Credit Agreement), exercise
any one or more of the following rights and remedies: (i) collect, receive,
appropriate or realize upon the Pledged Collateral or otherwise foreclose
or enforce Purchaser's security interests in any or all Pledged Collateral
in any manner permitted by applicable laws, rules or regulations of any
governmental authority or in this Agreement; (ii) notify any or all issuers
of or transfer or paying agents for the Pledged Collateral or any
applicable clearing corporation, financial intermediary or other Person to
register the Pledged Collateral in the name of Purchaser or its nominee
and/or to pay all dividends, interest and other amounts payable in respect
of the Pledged Collateral directly to Purchaser; (iii) sell or otherwise
dispose of any or all Pledged Collateral at one or more public or private
sales, whether or not such Pledged Collateral is present at the place of
sale, for cash or credit or future delivery, on such terms and in such
manner as Purchaser may determine; and (iv) require Borrower to assemble
all records and information relating to the Pledged Collateral and make it
available to Purchaser at a place to be designated by Purchaser. In any
case where notice of any sale or disposition of any Pledged Collateral is
required, Borrower hereby agrees that seven (7) days notice of such sale or
disposition is reasonable. All amounts received by Purchaser as proceeds
from the disposition or liquidation of all or any part of the Pledged
Collateral shall be applied as follows: first, to the costs and expenses
of collection, including court costs and reasonable attorneys' fees,
whether or not suit is commenced by Purchaser; next, to those costs and
expenses incurred by Purchaser in protecting, preserving, enforcing,
collecting, selling or disposing of all or any part of the Pledged
Collateral; next, to the payment of accrued and unpaid interest on all of
the Obligations; and last, to the payment of the outstanding principal
balance of the Obligations. Any excess Pledged Collateral or excess
proceeds existing after Purchaser's election to retain or dispose or
liquidate the Pledged Collateral (as applicable) will be returned or paid
by Purchaser to Borrower. If Purchaser fails to elect to retain, dispose
or liquidate the Pledged Collateral within a reasonable time after the
occurrence of an Event of Default, Purchaser will be deemed to have elected
to retain the Pledged Collateral.
8. MISCELLANEOUS.
(a) NOTICES. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Borrower or Purchaser under this Agreement shall be given as provided
in PARAGRAPH 7.01 OF THE CREDIT AGREEMENT.
(b) EXPENSES. Borrower shall pay on demand all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by
Purchaser in the enforcement or attempted enforcement of this Agreement or
in preserving any of Purchaser's rights and remedies (including, without
limitation, all such fees and
expenses incurred in connection with any "workout" or restructuring
affecting this Agreement or any bankruptcy or similar proceeding involving
Borrower). The obligations of Borrower under this SUBPARAGRAPH 8(b) shall
survive the payment and performance of the Obligations and the termination
of this Agreement.
(c) WAIVERS; AMENDMENTS. This Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Borrower and Purchaser. Each waiver or consent under any
provision hereof shall be effective only in the specific instances for the
purpose for which given. No failure or delay on Purchaser's part in
exercising any right hereunder shall operate as a waiver thereof or of any
other right nor shall any single or partial exercise of any such right
preclude any other further exercise thereof or of any other right.
(d) ASSIGNMENTS. This Agreement shall be binding upon and inure to
the benefit of Purchaser, Borrower and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights
and obligations under this Agreement without the prior written consent of
Purchaser and Purchaser may only assign or transfer any of its rights and
obligations under this Agreement to the extent permitted under Section 10.4
of the Investment Agreement.
(e) PARTIAL INVALIDITY. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
(f) CUMULATIVE RIGHTS, ETC. The rights, powers and remedies of
Purchaser under this Agreement shall be in addition to all rights, powers
and remedies given to Purchaser by virtue of any applicable law, rule or
regulation of any governmental authority, the Credit Agreement or any other
agreement, all of which rights, powers, and remedies shall be cumulative
and may be exercised successively or concurrently without impairing
Purchaser's rights hereunder. Borrower waives any right to require
Purchaser to proceed against any Person or to exhaust any Pledged
Collateral or to pursue any remedy in Purchaser's power.
(g) BORROWER'S CONTINUING LIABILITY. Prior to a foreclosure of
Purchaser's security interest in the Collateral or the payment in full of
the Obligations, notwithstanding any provision of this Agreement or any
exercise by Purchaser of any of its rights hereunder (including, without
limitation, any right to collect or enforce any Pledged Collateral), (i)
Borrower shall remain liable to perform its obligations and duties in
connection with the Pledged Collateral and (ii) Purchaser shall not assume
or be considered to have assumed any liability to perform such obligations
and duties or to enforce any of Borrower's rights in connection with the
Pledged Collateral.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules (except to the extent otherwise provided in the
UCC).
IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed as of
the day and year first above written.
NOR'WESTER BREWING COMPANY,
an Oregon corporation
/s/ James W. Bernau
--------------------------
Name: James W. Bernau
Title: President